This additional value can be, but not limited to, enterprise-grade features and up-time guarantees (often via a service-level agreement) to satisfy business or compliance requirements, performance and efficiency gains by features not yet available in the open source version, legal protection (e.g., indemnification from copyright or patent infringement), or professional support/training/consulting that are typical of proprietary software applications.
The underlying objective of these business models is to harness the size and international scope of the open-source community (typically more than an order of magnitude larger than what would be achieved with closed-source software equivalents) for a sustainable commercial venture.
[citation needed] The vast majority of commercial open-source companies experience a conversion ratio (as measured by the percentage of downloaders who buy something) well below 1%, so low-cost and highly-scalable marketing and sales functions are key to these firms' profitability.
Open source businesses that use this model often cater to small and medium enterprises who do not have the technology resources to run the software.
Serverless technology allows businesses to completely transfer infrastructure management to the provider, which means that teams can create scalable applications more efficiently, cheaper, easier, and more reliably.
[10] The FSF called the server-side use-case without release of the source-code the "ASP loophole in the GPLv2" and encourage therefore the use of the GNU Affero General Public License which plugged this hole in 2002.
The undertaking of the task, of variable complexity and modularity, and in which the crowd should participate, bringing their work, money, knowledge and/or experience, always entails mutual benefit.
Caveats in pursuing a Crowdsourcing strategy are to induce a substantial market model or incentive, and care has to be taken that the whole thing doesn't end up in an open source anarchy of adware and spyware plagiates, with a lot of broken solutions, started by people who just wanted to try it out, then gave up early, and a few winners.
Governments, universities, companies, and non-governmental organizations may develop internally or hire a contractor for custom in-house modifications, then release that code under an open-source license.
Some organizations support the development of open-source software by grants or stipends, like Google's Summer of Code initiative founded in 2005.
[19] As another example is SourceForge, an open-source project service provider, has the revenue model of advertising banner sales on their website.
One example is the successfully funded Indiegogo campaign in 2013 by Australian programmer Timothy Arceri, who offered to implement an OpenGL 4.3 extension for the Mesa library in two weeks for $2,500.
[26] Arceri delivered the OpenGL extension code which was promptly merged upstream, and he later continued his efforts on Mesa with successive crowdfunding campaigns.
[29] Another example is the June 2013 crowdfunding on Kickstarter[30][31] of the open source video game Cataclysm: Dark Days Ahead which raised the payment of a full-time developer for 3.5 months.
[33] Customers may prefer a no-cost and open-source edition for testing, evaluation, proof of concept development, and small scale deployment.
Further, customers will learn of open-source software in a company's portfolio and offerings but generate business in other proprietary products and solutions, including commercial technical support contracts and services.
The proprietary software may be intended to let customers get more value out of their data, infrastructure, or platform, e.g., operate their infrastructure/platform more effectively and efficiently, manage it better, or secure it better.
Some companies appear to re-invest a portion of their financial profits from the sale of proprietary software back into the open source infrastructure.
Examples for open-source developed software are Kot-in-Action Creative Artel video game Steel Storm, engine GPLv2 licensed while the artwork is CC BY-NC-SA 3.0 licensed,[46] and Frogatto & Friends with an own developed open-source engine[47] and commercialization via the copyrighted game assets[48] for iPhone, BlackBerry and MacOS.
[49] Other examples are Arx Fatalis (by Arkane Studios)[50] and Catacomb 3-D (by Flat Rock Software)[51] with source code opened to the public delayed after release, while copyrighted assets and binaries are still sold on gog.com as digital distribution.
For example, applications like ardour,[56] radium[57] or fritzing[58] it's completely free software on GPL license but there is a fee to get the official binary, often bundled with tech support or the privileges of attracting developers' attention to adding new functionalities to the program.
[60] An approach to allow commercialization under some open-source licenses while still protecting crucial business secrets, intellectual property and technical know-how is obfuscation of source code.
[62] The GNU General Public License since version 2 has defined "source code" as "the preferred form of the work for making modifications to it."
Popular non-game software examples are the Netscape Communicator which was open-sourced in 1998[75][76] and Sun Microsystems's office suite, StarOffice, which was released in October 2000 at its commercial end of life.
Traditional business wisdom suggests that a company's methods, assets, and intellectual properties should remain concealed from market competitors (trade secret) as long as possible to maximize the profitable commercialization time of a new product.
Looking at the landscape of open source applications, many of the larger ones are sponsored (and largely written) by system companies such as IBM who may not have an objective of software license revenues.
Smaller vendors doing open-source work may be less concerned with immediate revenue growth than developing a large and loyal community, which may be the basis of a corporate valuation at merger time.
According to Yochai Benkler, the Berkman Professor for Entrepreneurial Legal Studies at Harvard Law School, free software is the most visible part of a new economy of commons-based peer production of information, knowledge, and culture.
[88] The authors of VLC, one of the GPL-licensed programs at the center of those complaints, recently began the process to switch from the GPL to the LGPL and MPL.
[89][90] Much of the Internet runs on open-source software tools and utilities such as Linux, Apache, MySQL, and PHP, known as the LAMP stack for web servers.